Towards a New American Isolationism

By Walden Bello*, Focus on the Global South, September 5, 2008

(This essay originally appeared as the author’s commentary in Foreign Policy in Focus, Sept. 5, 2008.)

Despite the glitter that surrounded both the Olympics in Beijing and the Democratic National Convention in Denver, the messages coming to Asia from the two events were very different.

From Beijing, the message was, to put it in the words of one pundit, China has had a few bad centuries but is back on its feet.  From Denver, the word was that the world’s most powerful country has been on a desperate decade-long downspin that can only get worse if the Republicans keep the White House. 

For people in this part of the world, the weakening of US power is most evident elsewhere:  in the Middle East and Southwest Asia, where Washington is bogged down in unending wars in Iraq and Afghanistan; in Latin America, where the rebellion against neoliberalism and US meddling is in full swing; and, most recently, in Central Asia, where Washington and the North Atlantic Treaty Organization (NATO) have been taught a painful lesson in overextension in Georgia.

The erosion of Washington’s position is less obvious in East Asia.  After all, the US continues to maintain over 300 military bases and facilities in the Western Pacific.  Over the last decade, it has established what amounts to a permanent troop presence in the Southern Philippines to make up for its giving up its two big military bases on Luzon Island in 1992.   And in Indonesia, the Pentagon has reestablished its close ties with the Indonesian military after several years of uncertainty, using the opportunity provided by relief operations during the tsunami of 2004. 

Erosion of US Power in East Asia

Nevertheless, the region—and Southeast Asia in particular—is probably more independent of the US today than at any other time in the last 60 years.  Economics is the reason.  Over the last two decades, several developments have eroded the US’s position. 

First of all, its drive to create the trans-Pacific free trade area known as the Asia Pacific Cooperation (APEC) failed.  APEC was meant to be a westward extension of the North American Free Trade Area (NAFTA), and both were intended to serve as a geoeconomic counterweight to the European Union.  Japan, China, and the Association of Southeast Asian (ASEAN) countries, fearing US economic domination in the name of free trade, scuttled President Bill Clinton’s trans-Pacific dream at the APEC Summit in Osaka in 1995.  APEC summits continue to be held, but these are remembered more as times when heads of state don the host country’s national costume than as occasions for serious economic decisionmaking.

Second, the US effort to impose capital account and financial liberalization on the Asia Pacific economies as a key element of more thoroughgoing structural transformation backfired.  Capital account liberalization led to the Asian Financial Crisis in 1997-1998.  Instead of helping to shore up economies in crisis, Washington took advantage of the crisis to try to comprehensively transform the region’s economies along neoliberal lines.  As one of Clinton’s economic lieutenants saw it, “Most of these countries are going through a dark and deep tunnel…But on the other end there is going to be a significantly different Asia in which American firms have achieved a much deeper market penetration, much greater access.” 

The outcome proved to be different.  Malaysia imposed capital controls.  The International Monetary Fund (IMF) was discredited, with the Thai government declaring its intention never to go back to the agency after paying off its loans in 2003 and the Indonesian government resolving to do the same thing in 2008.  While Washington and the IMF were able to kill Japan’s proposal for an Asian Monetary Fund (AMF) at the height of the crisis, the East Asian governments formed the “ASEAN Plus Three” financial mechanism that excludes the US and is likely to be the precursor of a full-blown regional financial agency.  Neoliberal transformation has stalled in Japan and most Southeast Asian countries, with possibly only South Korea continuing to travel along the free-market path desired by the US. 

 Moreover, to protect themselves against future speculative crises provoked by the movements of global finance capital spearheaded by US funds, the Asian governments have built up massive foreign exchange reserves, on which the US has become dependent for funds to prop up its massive military expenditures and the middle-class spending that for a long time served as an artificial barrier against recession.  With the unraveling of American financial institutions, the onset of recession, and the depreciation of the dollar, the US economy has become hostage to these countries’ decisions to continue to lend to Washington and Wall Street.

A third development that is not positive for the US is the region’s becoming increasingly dependent on the red-hot Chinese economic locomotive.  According to a United Nations report, China has been a “major engine of growth for most of the economies in the region.  The country’s imports accelerated even more than its exports, with a large proportion of them coming from the rest of Asia.”   In fact, Chinese demand is what pulled the Asia Pacific economies from the recession caused by the Asian financial crisis that the US tried to take advantage of.  China has not only surpassed the United States to become Japan’s main trading partner but Chinese demand has helped keep the world’s second-largest economy from falling back into recession. 

Conscious of its economic clout, China has moved to consolidate its position as East Asia’s new economic center via smart economic diplomacy.  In 2002, it convinced the ASEAN governments to create the ASEAN-China Free Trade Area that is scheduled to come into effect in 2010.  Japan has tried to catch up by offering ASEAN countries “economic partnership agreements.” Meanwhile, talks on a U.S.-Thailand free trade area have been frozen by popular opposition to Washington’s strident championing of the so-called intellectual property rights of its corporations.  All in all, there is a great deal of truth in the observation that the biggest beneficiary of the Bush administration’s imperial and corporate misadventures over the last decade has been China, which has kept itself from military entanglements and devoted itself singlemindedly to economic development.

Challenges Posed by China’s Ascent
The rise of China provides a number of very fundamental challenges to different key actors in East Asia.  
To Japan, the key challenge is to move from being effectively a vassal state of the United States in security matters to a mature relationship with China that would definitively leave behind five decades of aggression followed by six decades of serving as a springboard for US power projection onto the Asian mainland.  A definitive acceptance of responsibility for the atrocities committed by Japanese troops during the Second World War, including the infamous Nanjing Massacre, on the part of the Japanese people and their leaders is an indispensable step in this move towards a mature relationship between Asia’s leading economic powers.

For Southeast Asia, the challenge is how to avoid becoming an appendage of the Chinese economy.   

Chinese demand was, as mentioned earlier, an immense force lifting Southeast Asia’s economies from the depths of the Asian financial crisis.  However, China’s developing trade and investment relations with ASEAN have had some not pleasant aspects.

The experience of Thai vegetable and fruit producers owing to an “early harvest” free trade arrangement with Thailand earlier this decade is one of them.  Under the agreement, Thailand would export tropical fruits to China while winter fruits from China would be eligible for the zero-tariff deal.  The expectations of mutual benefit evaporated after a few months, however, with massive imports from China wiping out Thai producers of many fruits and vegetables such as garlic and red onions.

But the fear of many in Southeast Asia goes beyond having trade agreements with China that would yield unequal benefits. With land and energy relatively scarce in China, Chinese enterprises, with the blessings of the Chinese government, are seeking deals that would allow them to mine minerals and grow crops in Southeast Asian countries for exclusive export to the China market.  To take one example, in a deal with the Philippines, the Chinese Fuhua Group planned to invest $3.83 billion over five to seven years to develop 1 million hectares of land to grow high-yielding strains of corn, rice, and sorghum.   The Philippine government’s Departments of Environment and Agrarian Reform plan to identify “idle lands” that could be incorporated into the Chinese plantations.  This in a country where seven out of 10 farmers are landless!  This is a formula for real trouble. 

Some have been quick to call China’s international economic policies “imperialistic.”  It is, however, difficult to sustain this label since exploitative relations between China and other developing countries have not congealed structurally.  Economic trends where China emerges as a net beneficiary do not add up to imperialism.  Moreover, there is absent that element of force and coercion that accompanied the imposition of European and American economic power on weaker societies. 

Nevertheless, Southeast Asian governments need to balance their spontaneous feelings of South-South solidarity with cool-headed realism.  Countries like China, Brazil, and India,  are led by  developmentalist elites that are seeking to find their place in a new global capitalist order marked by the loosening of the economic hegemony of the old capitalist centers, that is, Japan, the US, and the European Union.  The pursuit of national economic interest, not regional cooperation for development, is their central concern. By uncritically signing trade and investment agreements or joining a regional formation anchored by these bigger, ambitious powers, smaller countries may simply end up being used economically, territorially, and politically to advance their regional and global agenda. 

Does this mean that a trade agreement and regional economic formation linking China and ASEAN is to be avoided at all costs?  No, it simply means the ASEAN governments must enter talks with China with eyes wide open and negotiate collectively, not as 10 separate governments.  They must make it clear to China that they do not desire a trade agreement based on free trade, such as the arrangements that the US, European Union, and Japan are pushing on them, but one where, as the weaker economies, the net benefits of the arrangement accrue to them, not China.  They must see to it that the terms of association must be carefully negotiated and that they work closely to offset the dominance of the central power. 

Yes, China’s relationship with Southeast Asia cannot be described as an exploitative one.  But unless considerations of equity are front and center in the negotiation of economic relationships between Beijing and its neighbors, the old structural patterns marking the relations between Southeast Asia and Europe, the United States, and Japan could easily be replicated.

The US-China Relationship
The most critical regional relationship, however, is between the US and China since the US is the most powerful power in East Asia and China the next most powerful.

In his stimulating book Adam Smith in Beijing, the eminent political economist Giovanni Arrighi of Johns Hopkins University writes that there are three alternative policies that the United States can adopt towards a China that is on the ascendant.

The first is an updated version of the Cold War strategy of containment.  In this strategy, China is seen as a strategic threat or, as the 2002 National Security Strategy Paper of the Bush administration puts it euphemistically, a “strategic competitor.”  The US response would be to “dissuade China” from its military ambitions by giving a high profile to the massive American military presence in the Western Pacific, strengthening the bilateral agreements with US allies that sustain this trans-Pacific garrison state, and building up defense cooperation with India, Asia’s other big power.  Needless to say, this response misconstrues the nature of the Chinese challenge, which is an economic rather than a strategic one.  And needless to say as well, this response would be disastrous for the whole world.

A second strategy is not to directly confront China as the US confronted the old Soviet Union but to put into motion balance of power politics, wherein China is weakened indirectly.  Arrighi quotes James Pinkerton, a protagonist of this approach:

Instead of confronting directly the rising Asian powers, the United States should play them off each other.  As the Latin expression tertium gaudens—the happy third—reminds us, rather than getting in the middle of every fight, sometimes it is better “to hold the coats of those who do.”  For the US national interest, “a better Asia would be one in which China, India, Japan, and possibly another ‘tiger’ or two contend with each other for power while we enjoy the happy luxury of third party by-standing.” |

Needless to say, this strategy would also have terrible consequences for the region.

A third strategy, one that Arrighi identifies with two old faces from the 20th century, Henry Kissinger and Zbigniew Brzezinski, National Security Adviser to President Jimmy Carter, does not see China as a revisionist power but as one that wants to join the global status quo.  The appropriate response for Washington is to accept China as part of the elite of the global state system and work with it in pursuit of international stability, in the same way that Britain, the hegemon of the 19th century, cooperated and made way for the United States, the hegemon of the 20th century.  

Arrighi prefers the third strategy.  Indeed, though still in essence conservative in that it seeks to preserve the global status quo, this is by far a preferable American response.  It is, however, the least likely to be adopted.  The problem is that imperial America is not like imperial Britain.  The US is ideologically an expansionist missionary democracy that will find it difficult to accept a No. 2 status without provoking a reactionary populist reaction among key segments of its population.  Aside from its powerful corporate and strategic drives, providing leadership in the messianic enterprise of remaking the world along the lines of a liberal or neoliberal Lockean democracy is a fundamental driving force of US hegemony.

Civil Society, China, and America
This conundrum inevitably leads to a discussion of how civil society, both in Asia and globally, ought to respond to the erosion of US hegemony and the ascent of China.  In the best of all possible worlds, the US and China could be supporters of the effort to create a new world order built on peace, justice, and popular sovereignty.  Unfortunately, we live in a less than ideal world 

With respect to China, the task of civil society is to pressure it, as it intensifies its engagement with the world, to resist the temptation of following the destructive imperial path trodden by Europe and the United States.  It is also to push it to move away from the fossil-fuel intensive, consumption-oriented path of development pioneered by the West to one that is more ecologically sustainable and sensitive to equity issues.  This will not be easy.  Nevertheless, there are signs of hope, one of them being the rethinking of the direction of China’s development that is going on among China’s leaders. One can only agree with Arrighi when he says:

If the reorientation succeeds in reviving and consolidating China’s traditions of self-centered market-based development, accumulation without dispossession, mobilization of human rather than non-human resources, and government through mass participation in shaping policies, then the chances are that China will be in a position to contribute decisively to the emergence of a commonwealth of civilizations truly respectful of differences.  But, if the reorientation fails, China may well turn into a new epicenter of social and political chaos that will facilitate Northern attempts to reestablish a crumbling global dominance. 

With the Chinese leadership’s great concern for legitimacy both internally and internationally, one cannot say that the failure of the proponents of reorientation is a foregone conclusion.  This is why pressure from international civil society for a change in economic strategy, for pro-environment policies, for the expansion of democratic rights, and for equitable relations with the developing countries must be kept up.

Towards a New American Isolationism
Blunting Washington’s innately hegemonic thrust will be much more difficult.  Difficult but not impossible. 

Perhaps the best strategy for civil society at this point is not so much to rely on appeals to American ideals but to continually point to the very high costs of intervention, in terms of soldiers killed, money spent, domestic strife, and credibility lost, to consistently campaign against any temptation for US forces to intervene on whatever grounds.  Part of this strategy must be pressure for the removal of the US military bases from Asia and the Pacific and the neutralizing of the bilateral treaties between the US and a number of Asian countries.  Aside from being the pillars for Washington’s containment of China, these institutions are the main factors that prevent China and other East Asian countries from evolving a more mature relationship. 

More broadly, the aim of civil society mobilization both in Asia and globally should be to encourage a new American isolationism. Barack Obama is definitely preferable to John McCain, but the world does not need a new American internationalism, this time of the liberal and “soft power variety.”  We should not tolerate a policy of withdrawing troops from Iraq, only to send them to Afghanistan in the name of defending human rights. We do not want in place of military confrontation, an aggressive diplomatic isolation of Iran led by a Democratic elite that is uncritical, as Obama is, of Israel.  We do not want an obsession with the Middle East to be replaced with an obsession with destabilizing Hugo Chavez and restoring US influence in Latin America.  And we should worry when Bill Clinton says, as he did during the Democratic Party convention, that one of Obama’s objectives will be to “restore American leadership in the world.”  Asia does not need or want American leadership.

What Asia, like the rest of the world, needs is a vacation from a messianic United States, and a few decades of a withdrawn, self absorbed, isolationist America, paying attention to its domestic troubles and deterred by the high costs of the continued pursuit of hegemony globally, would be good for the region, good for everybody. 
   
The Asia Pacific region, in sum, is pregnant with both dangers and possibilities, and there is, if anything, great indeterminacy, a great element of contingency on where we’re heading.  In times like this, when the possible and the impossible hang in a fine balance, it is important to remember the advice of that great Italian thinker Antonio Gramsci about balancing the pessimism of the intellect with the optimism of the will.

* Walden Bello is Professor of Sociology at the University of the Philippines and senior analyst at the Bangkok-based research and advocacy institute Focus on the Global South.  He is the author of, among other books, Dilemmas of Domination: TheUnmaking of the American Empire (New York: Henry Holt, 2005).

Putting a price tag on poverty

Tanim Ahmed*, NewAge, September 4, 2008. Dhaka, Bangladesh

Poverty is not merely a bundle of economic goods with price tags upon them. It is not merely so much rice, so many pencils or paracetamol. It arises out of the lack of one’s ability to effectively participate in social life or the lack of one’s voice in political representation. It arises from one’s sense of insecurity. It arises from the desperation and frustration of not being able to provide for one’s children. It arises from the sense that one is deprived of the opportunities to live a better, or in this case, a more human life.

 

Photo: NewAge

TO BEGIN with an oversimplified example, let us assume that human well-being is measured by their ability to pay for haircuts – the more haircuts one is able to pay for the better off one is. A haircut would cost around $10 in New York and about Tk 20 in Dhaka. It would mean that two persons with the same earning, for instance $10 or Tk 700 per day, would have distinctly different purchasing powers. One would be able to pay for one haircut while the other 35. Since haircuts are the basis of well-being, the Bangladeshi would be 35 times better off than the American. Needless to say, it does not work out that way.
   

Well-being does not depend on the number of haircuts but a host of other more essential services and commodities. Services, as one would find in the case of haircuts, boot polishing or plumbing, are comparatively far costlier in developed countries than they are in poor countries like Bangladesh, especially when compared to the proportional differences in prices of other commodities like food and clothing. In other words, between rich and poor countries, prices of commodities vary less than those of services, i.e. purchasing power would not vary as much in case of those commodities as it would for services in the United States and Bangladesh.
   

Before even going into the latest poverty figures released by the World Bank on August 26 and what it implies, one must first question the benchmark for poverty expressed in purchasing capacity called Purchasing Power Parity. The much popular ‘dollar a day’ was expressed in this purchasing capacity terms across the world and meant to be equivalent to the purchasing capacity of $1 in the United States – the base country – in 1985, changed to $1.03 in 1993 and, according to the latest study, $1.25 in 2005. The question is what the equivalent of $1.25 in takas meant to purchase.
   

The bundle of choice for households or individuals in dire poverty would be distinctly different from those better off. The poor spend a high proportion of their income on basic needs whereas those better off spend a lesser proportion on such items with a substantial portion of their incomes purchasing services. But such benchmarks are derived from national accounts and a more general pattern of consumption in different countries. There are two obvious problems here. Even in Bangladesh’s case, although services contribute about half the GDP consumption pattern of individuals or households living in poverty would hardly reflect such a trend. Secondly, the poor buy commodities in much small quantities that would naturally mean that they end up paying more in the long run – buying a few hundred milligrams of cooking oil instead of a five-litre pack for instance.
   

Another recent study by the Asian Development Bank strives to capture that precise difference attempting to arrive at a more balanced poverty benchmark for Asia. It shows that the bottom 30 per cent of the Bangladeshi population spend 65.6 per cent of their household expenditure on food and drink while the average household spends just over half. In purchase power terms $1 dollar translates into about Tk 14 according to general consumption patterns but it is about Tk 25 according to household consumption patters. What it means is that the poverty benchmark translates into a higher purchasing power when considered on the basis of general consumption but far lower when considered on the basis of household consumption. When Tk 14 is considered equivalent to the ‘dollar a day’ benchmark, it means that an individual would be able to procure enough commodities and services to escape poverty spending Tk 14 every day. In the other case it would mean that the individual requirement to escape poverty would be Tk 25.
   

The two figures could make substantial difference as regards the number and percentage of poor people in Bangladesh and challenge the government’s claimed progress in poverty reduction, especially in the context of Millennium Development Goals. It is not that attainment of these UN development goals would mean substantial improvement in the economic system that inherently breeds poverty, but the new statistics and benchmarks would certainly cause governments to revise their statistics and review their supposed progress based on this new information.
   

A new working paper from the World Bank, ‘The Developing World Is Poorer Than We Thought, But No Less Successful in the Fight against Poverty’, by two of its economists, Shaohua Chen and Martin Ravallion, revised the previous poverty benchmark to the equivalent of $1.25 in 2005 in the United States, instead of the $1.03 in 1993. This revision saw the number of poor people increase from about 879 million, as reported by the World Bank earlier, to almost 1.4 billion. That is a difference of over half a billion people living in extreme poverty.
   

As other estimates and analyses point out, revision of these benchmarks by small margins result in huge differences in the numbers and as Sanjay Reddy, an assistant professor of economics at Columbia University in the United States, points out, such a difference in result with slight changes in the benchmark would render the benchmark itself ‘unfit for use’ in most cases pertaining to economic statistics. According to analyses, if the benchmark is revised upwards to $1.45 in 2005, which is closer to $1.03 in 1993 in terms of prices, then the number of poor increases to 1.72 billion. If the year 2005, on the other hand, is taken back to 2003, the developing world’s poverty reduction rate shows substantial deterioration so as not to favour the claim made in the World Bank paper.
   

Then, of course, there is the factor of China and India that skews the overall poverty figures substantially and make allowances for the claim of having attained substantial poverty reduction, although sub-Saharan Africa’s number of poor have increased by all estimates. The Asian Development Bank’s set the poverty benchmark at an equivalent of $1.35 in 2005 in purchasing power, which according to the Key Indictors of the Asia and the Pacific 2008 is Tk 22.64 in 2005.
   

The general contention of most critical analyses regarding the World Bank’s poverty estimates is that it undercounts poverty and thereby projects a rosier picture of poverty. Critics, therefore, make the claim that poverty estimates should be made in a more inclusive manner taking into consideration a wider variety of data to make it more robust and acceptable.
   

Another point that must be made is that the global context has gone through significant transformation in the past two years with fuel and food prices rising phenomenally and inflation increasing markedly. During this time currencies have seen their purchasing power decrease and cost of living rise. In the case of Bangladesh, these months have also seen a perceptible increase in employment that could only mean further decrease of real wages.
   

Regardless of all the analyses and estimates and regardless of the robustness of whatever estimates are employed to ascertain poverty around the world, these estimates would necessarily concentrate on the precision of a certain bundle that should allow one to escape poverty. The central debate then would revolve around the precision of that bundle and its market price and how best to translate that value into a globally acceptable unit such as the purchasing power parity. The value of PPP dollars then would require further revision. However, this bundle would typically include ‘needs’ or ‘necessities’ that are tradable in the market; items that have a price tag to be more precise. Thus, it would include food, shelter, clothing, medicine and books but not such things as security or happiness or leisure, which should be considered as crucial when ascertaining even dire poverty.
   

The very proposition that an individual’s degree of happiness be included as a factor for assessing dire poverty might well be summarily dismissed considering that it is a luxury that not even the rich might claim to have. Let us consider the advertisement of a Bangladeshi mobile operator that captured the imagination of many. In ‘din bodlaise’ – roughly meaning ‘times have changed’ in English – the young boy in monochrome grows up to inherit the livelihood of his forefathers who were fishermen, but does not have to sell his catch to the parasitic middleman and therefore is ostensibly better off.
   

That young boy in monochrome had wanted to visit the fair and by evening, after his father had sold the entire catch for a paltry sum, realised that it was not to be. The look on his father’s face told him a visit to the fair was out of the question. It appears he tears himself away from the fireworks that shoot off the fairgrounds as night settles and his father tugs his hand. In the next generation that young boy, now a man, having sold his catch for a good price, takes up his young son – who has stood first in his class by the way – in his arms declaring that they would visit the fair that evening.
   

Poverty is not merely a bundle of economic goods with price tags upon them. It is not merely so much rice, so many pencils or paracetamol. It arises out of the lack of one’s ability to effectively participate in social life or the lack of one’s voice in political representation. It arises from one’s sense of insecurity. It arises from the desperation and frustration of not being able to provide for one’s children. It arises from the sense that one is deprived of the opportunities to live a better, or in this case, a more human life.
   

Agencies and organisation such as the World Bank and Asian Development Bank will continue with their exercise to attain a better estimate for poverty and demonstrate how the market works to alleviate their poverty, if only to vindicate their work and justify their existence. Critics would dissect their methodology to prove them wrong. But that entire exercise is limited to putting a price tag on poverty. However, the question for governments must be one of principle – how they regard poverty. As an institution that serves the citizens and must look towards the welfare of the common people, attainment of a price tag must not suffice.

*Tanim Ahmed: tanimahmed@gmail.com

New Power Politics in Asia: Focus Releases Briefing Note on the Shanghai Cooperation Organzation

Focus on the Global South has released a briefing note on the Shanghai Cooperation Organisation (SCO). The Shanghai Cooperation Organisation (SCO) is a regional mechanism, which was created in 2001 and consists of the following:

People’s Republic of China, Kyrgyzstan, Russia, Tajikistan, Kazakhstan and Uzbekistan. It was inspired by the need to solve the border disputes lingering between the Soviet Union’s successor states and China in the wake of the end of the Cold War. Originally a Chinese initiative, taken after resolving their border problems with Central Asia and Russia, it was also profitable for the Central Asian States, which were lacking in consistency, stability and resources in the midnineties and struggling to establish multilateral and bilateral relations beyond the region. It was also designed as a platform to balance the role of the United States in the Central Asian region.

Main findings of this paper :

• The SCO has been able to meet with its initial objective to establish geopolitical multipolarity in Central Asia and check the US advance into the region.
• It is a reflection of the emerging multi-polar world.
• Its increasingly acquiring strength is suggestive of becoming a major political force of the Eurasian region.
• The SCO will play a vital role in ensuring international security.

Click to download the paper. 

SAARC: So Little Free Trade, But So What?

Benny Kuruvilla* (1), Focus on the Global South-India

South Asia’s talking shop – the South Asian Association for Regional Cooperation (SAARC) - held yet another annual summit from 2 -3 August 2008, with the usual entourage of ministers, bureaucrats, media, think tanks and NGOs descending into Colombo. Over 1200 delegates attended the 15th summit of the eight-member club, considered the world’s largest regional grouping. (2)  The spotlight was expected to be on the food and energy crisis, but bombings in the last week of July in the Indian cities of Bangalore and Ahmedabad ensured that the ‘fight against terrorism’ became the centre piece of the conclave. 

The Colombo declaration titled ‘Partnership for the growth of our people’ emphasised, more than anything else, the need for the strongest possible cooperation in fighting terror and trans-national organised crime.(3) There were sections on climate change and a separate statement on food security. This was a positive step as concrete initiatives to deal with the climate crisis, rising food prices, declining agrarian incomes and ensuring food security will be welcome. But there was also a lame section in the declaration on the nearly defunct free trade treaty for the region, the Agreement for a South Asian Free Trade Area (SAFTA). The absence of any serious commitment from the SAARC political leadership to move ahead on SAFTA met with criticism from business quarters. Expressing disappointment on the lack of concrete steps to invigorate free trade in the region, Tariq Sayeed the President of the SAARC Chamber of Commerce and Industry (SAARC CCI) said ‘hunger and terrorism are undoubtedly vital issues for a region like South Asia, but promoting trade and entrepreneurship could be the best answer to deal with such issues’. (4)

This sidelining of regional trade integration is not new. Despite previous attempts beginning from the SAARC Preferential Trading Arrangement (SAPTA) in 1995, economic integration has been a consistent no-show in South Asia. And frankly other than the usual suspects — the World Bank, the Asian Development Bank, a few neo-liberal think tanks and some bureaucrats — nobody is really is clamouring for free trade in the region. For sure, trade between SAARC countries is marginal; intra-regional trade accounts for only 5.5 per cent of total trade and there is merit in increasing that  substantially but, as this article argues, a deep integration Free Trade Agreement (FTA) is barking up the wrong tree.      

WHAT IS BEHIND SAPTA’S FAILURE?
Despite modest expectations, a flexible structure and three rounds of preference exchange negotiations, SAPTA came a cropper. There are several reasons for this. In the 1990s member countries preferred the route of unilateral domestic reforms for trade concessions rather than through the SAPTA. (5)  In the initial rounds, although India offered, on paper, the largest number of concessions in tariff lines, it tactically left Non-Tariff Barriers (NTBs) off the agenda. (6) Moreover the Indian tariff cuts were not deep enough and excluded items such as textiles in which countries like Bangladesh and Sri Lanka were competitive. This ensured that the largest market in the region remained effectively closed. In short, there were not enough of the preferential aspects in SAPTA for a preferential trading arrangement to flourish. While some argue that this led to a loss of trade opportunities, the flexible approach in SAPTA did indeed address some of the sensitivities of member countries. (7)  The positive list for instance addressed the fear of a surge of imports from India into other countries in the region that already experienced enormous bilateral trade imbalances with the latter. (8) The political situation in the region didn’t help the trade liberalisation cause either; the 1999 coup d’etat in Pakistan, the assassination of members of the Nepal royal family in 2001, the 2001 election boycott in Bangladesh and the continuing ethnic strife in Sri Lanka ensured the primacy of domestic political priorities. 

This slow progress of the SAPTA should have called for a rethink and directed policy makers towards more flexible options to manage trade, especially for the smaller countries in the region, but instead there was a foolish attempt to speed up the process by removing flexibilities and converting the region into a fully-fledged Free Trade Area. Predictably, this set it up for failure yet again. The SAFTA was signed in 2004 and, after arduous negotiations on revenue loss compensation, rules of origin and sensitive lists, it came into force in January 2006. Unsurprisingly, SAFTA still had long negative lists, a limited number of products for tariff concessions, restrictive rules of origin, exclusion of issues such as para-tariffs and NTBs and the exclusion of the services sector. Members gave themselves till 2016 to achieve total liberalisation and agreed that there would be a two tiered system of tariff cuts; a slower pace for Least Developed Countries (LDCs) and a faster pace for others. 

The large number of items on the sensitive list (those that will not be subject to tariff cuts) is evidence of the recognition of possible negative consequences of tariff reductions on tax revenues and livelihoods. The mid 2006 lists had India with 867, Pakistan 1183, Sri Lanka 1574, Nepal 1355, Bangladesh 1254, Maldives 671 and Bhutan with 259 items which would not face the chopping block. (9) Facing a SAPTA like situation, hectic parleys began to try and prune this long list, but progress continues to be elusive as before. Part of the reason is simple. For instance in the textiles sector the presence of several products (such as readymade garments, woven and knitted garments, special woven fabrics, handlooms, handicrafts, jute and jute goods) in the sensitive list illustrates that India, Bangladesh, Nepal and Pakistan are in competition with each other. India, the benign hegemon that promises to undertake ‘asymmetrical responsibilities’, has 302 textiles lines in its sensitive list. As each country would want to protect its domestic sector, duty free quota free trade is not likely to be on when there is competition from the region. 

INDIA-SRI LANKA FTA SETS A TREND
India and Sri Lanka were the pioneers in the region to experiment with a free trade agreement. Signed in 2000, the ISFTA did lead to increased trade between them but it also brought in its wake negative impacts in specific regions and sectors. The agricultural sector in one of India’s southern states, Kerala -  which directly competes with Sri Lanka in a number of products — was adversely impacted. The implementation of the FTA saw high volatility in pepper and coconut prices which resulted in farmers in Kerala facing uncertainties in their incomes. For instance, the export of pepper from Sri Lanka to India increased from 2154 tonnes in 2000 to 6167 tonnes in 2003. (10) The price of pepper per quintal declined from the all time record of Indian Rupees (INR) 21502 in 1999-2000 to INR 6980 in 2004-2005. (11) The sharp drop in prices accentuated the ongoing crisis for small producers and the initial years of the FTA saw hundreds of farmers in the pepper belt of Wayanad district in Kerala committing suicide. 

Despite this, India has pushed for scaling up the ISFTA into a Comprehensive Economic Partnership Agreement (CEPA) and pre-SAARC media reports did indicate that the CEPA would be signed on the sidelines of the 2008 Colombo summit. But Sri Lanka had to postpone the event indefinitely due to opposition from left parties such as the Janatha Vimukthi Peramuna (JVP) whose member of parliament Wimal Weerawansa argued that a CEPA would deal a crippling blow to the service sectors in Sri Lanka. (12). Weerawansa argued in the Parliament that the provisions of the deal would give Indian investors an upper hand, leaving local enterprises in the doldrums. 

SERVICES AND INVESTMENT STALLS NEGOTIATIONS
The 2008 Colombo declaration calls upon SAARC members to commence negotiations for a Framework Agreement on Trade in Services and an Agreement on Investment Promotion and Protection. While India, with a relatively developed services sector, has a vested interest in this move, it is a contentious issue for others. In a February 2007 meeting at the Ministry of Commerce, industry representatives in Bangladesh came out against the liberalisation of the country’s incipient services sector under SAFTA. (13) And as mentioned in the preceding section the India Sri Lanka CEPA is now stuck on the issue of services. 

There are of course proponents from civil society as well. South Asia Watch on Trade, Economics and Environment (SAWTEE), an NGO based in Kathmandu agrees that Pakistani and Indian services companies in information technology, telecommunication, banking and financial services and engineering will gain from a services agreement within SAFTA. They also argue that since the potential for intra regional services trade and investment is high it is also a better option for LDCs, given that weakness in manufacturing in almost all SAARC countries except India. Moreover, since services provision is, at times, inadequate in the LDCs, it is assumed that free trade in services can add to the overall availability and quality of services. (14) 

This is a dangerous and flawed argument. Given the experience of developing countries in liberalising services the reluctance of countries such as Bangladesh and Sri Lanka in opening up their services sector under a legally binding framework is justified. Liberalisation and concomitant de-regulation, especially in basic services, undermines the public sector, resulting in diminishing access of such services to poorer sections of the population. Liberalisation kicks in de facto privatisation in cases where big private sector operators crowd out the public sector (in sectors such as finance, insurance and telecommunications). It is thus prudent that countries be given the time to scale up regulatory frameworks and do comprehensive sector level assessments based on consultations with all affected constituencies such as industry, unions, consumers, local and regional government representatives and different line ministries before they open their services to the private sector, even if they are from neighbouring developing countries. 

At the February 2007 SAARC business leader’s conclave in Mumbai investment was identified as a key sector to be integrated into SAFTA for an effective increase in regional trade. At the event Indian Minister of State for Commerce Jairam Ramesh stated that countries such as Bangladesh, Nepal and Pakistan would not be able to have a positive trade balance with India, because of the nature of their economies. The key to resolving this issue was not trade but integration of investment rules in the region through protocols in SAFTA that provide market access and protection to FDI. This, according to Ramesh, would make it possible for other countries in the region to improve their trade balance with India. It is unlikely that policy makers and the business sector in other SAARC countries will fall for this logic that is reflective of Indian business’ mercantilist interests. Applying free trade principles of non-discrimination to FDI would seriously limit the ability of countries to reach national development objectives through proactive industrialisation policies. Policy makers in many developing countries have recognised the importance of the quality of the FDI received and have attempted to improve it through selective policies and by imposing performance requirements on foreign affiliates and by providing incentives for high quality investments. For example, East Asian countries such as South Korea have in the past pushed FDI into high technology and export-oriented sectors using various policy instruments. (15) These include provisions on localisation, contribution to development of modern industries, transfer of technology and export orientation.  

The national treatment clause (Article 5) in SAFTA would prohibit member countries from using several of these policy instruments. Regulations such as equity ceilings (regulation on a maximum of FDI allowed in a national company), obligations on technology transfer, universal services provision (legislation that obliges private providers in basic services such as health, education, water to supply services to marginalised sections) and employment of local labour will fall foul of SAFTA rules. Such an investment framework under SAFTA rules will maximise investor rights at the cost of development priorities.  

LESSONS FROM WTO NEGOTIATIONS 
In the ongoing WTO trade talks, South Asian countries have been reluctant to cut industrial tariffs under the WTO Agreement on Non Agricultural Market Access (NAMA). They have argued that under the formulas proposed in the WTO they would have to implement steep tariff cuts which would severely impact local industries, balance of payments, tariff revenues, policy space and employment, all of which are crucial components of national development and poverty reduction policies. As SAFTA follows a similar logic of progressive tariff cuts, the effects on small industries that are as yet not ready for competition will be similar.

TIME TO THINK BEYOND FREE TRADE 
Trade and development policies for a small vulnerable economy such as Nepal will be significantly different from those of countries such as India and Pakistan. For Nepal this would entail product diversification, deepening of local industrial activity and scaling up technology. An economically integrated South Asia will not allow the Nepalese Government to follow policies that allow this. National policy space is both needed and justified to create an enabling environment for local industry and employment. This is not to say that trade cannot happen among the SAARC countries. In fact reports indicate that there is vibrant ‘informal’ trade within the region which shows that complementarities do exist. It is up to policy makers to go beyond lofty empty rhetoric at summits and instead meaningfully engage with traders and agriculture groups to find ways of creating a bottom-up trade co-operation framework for the region. Or they can wait for the next SAARC summit in the Maldives to insert another paragraph on the importance of implementing SAFTA.

* Benny Kuruvilla is a research associate with Focus on the Global South based in Delhi, India. bennyk@focusweb.org 

NOTES
1. With inputs from my colleague Afsar Jafri and Susana Barria, a former intern at Focus. Comments can be sent to: bennyk@focusweb.org 
2. With a population of 1.5 billion, the SAARC is the largest regional grouping in the world. Member countries include Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The second largest regional group is the Association of Southeast Asian Nations (ASEAN) with 526 million followed by the European Union (EU) with 500 million. 
3. SAARC (2008). ‘Declaration of the Fifteenth  SAARC summit’
4. Anonymous, ‘SAARC chamber concerned over sidelining of trade issues’ , The News, August 06, 2008
5. Research Information Systems (2003), ‘Regional Trade Liberalisation under SAPTA and India’s Trade Linkages with South Asia’. New Delhi 
6. Non-tariff barriers include government measures such as quantitative restrictions, import licensing and variable levies.
7. The SAPTA was based on a positive list approach and did not have any strict deadline for implementation. A positive list approach allows countries to choose products that will be liberalised as opposed to a negative list in which all products are deemed covered unless specific exceptions are made.  
8. Bhutan is the only country which has a positive trade balance with India largely due to energy imports by the latter.  
9. Government of India. (2006). ‘South Asian Free Trade Area, Annex-I- Sensitive Lists of Member States’. Ministry of External Affairs: New Delhi.  http://www.saarc-sec.org/main.php. Note that where member countries have 2 sensitive lists (for LDC and NLDC) the longer list has been used. 
10. Report on Export of Pepper from Sri Lanka to India under ISFTA –Implications, by Sri Lanka Export Development Board, Page 7, http://www.srilankabusiness.com/eresearch/pdf_files/ISFTA-Implications/pepper%20Internet.pdf
11. Dhar Biswajit and Verma Poornima (not dated), ‘India-Sri Lanka Free Trade Agreement: Regional Implications for India. Working paper. Unpublished. 
12. Anonymous, ‘Sri Lankan MPs clash over CEPA with India’, Economic Times, 6 August 2008. 
13. Anonymous, ‘Bangladesh sets SAFTA strategy tomorrow’, South Asian Media Net, February 11 2007.
14. Raj Bhatt Shiv, ‘Services under SAFTA: how to make it work for South Asia’, SAWTEE, September 9 2006.
15. Nagesh Kumar. (2002). ‘Globalisation and the quality of FDI”, Oxford University Press: New Delhi. 

REFERENCES
Gallagher, Kevin P. (2005). Putting Development First: The Importance of Policy Space in the WTO and IFIs. London: Zed Books.
Nath Mukherji Indra. (2004). ‘Towards a Free Trade Area in South Asia: Charting a Feasible course for Trade Liberalization with Reference to India’s Role’. RIS: New Delhi, December
Research Information Systems (2003), ‘Regional Trade Liberalisation under SAPTA and India’s Trade Linkages with South Asia’. New Delhi

‘You cannot eat coal’: resistance in Phulbari

NewAge, August 19, 2008. Dhaka, Bangladesh

Those who campaign against the ruthless exploitative practices of trans-national mining companies say, increased investment results in human rights abuses, especially against rural communities which the companies want to dislocate and uproot. They also say that the role of the state in extractive sector governance and citizens’ protection diminishes, while its role in protecting and promoting the interests of trans-national corporations increases. One sees that happening in Phulbari, over Asia Energy’s proposed Phulbari coal project, writes Rahnuma Ahmed

 The August 2006 protests at Phulbari. Photo: Andrew Biraj

‘Only when the last tree has withered, and the last fish caught, and the last river been poisoned, will we realise we cannot eat money.’
   

Cree proverb
   


   ‘[the] uprootedness and superfluousness which have been the curse of modern masses since the beginning of the industrial revolution and have become acute with the rise of imperialism at the end of the last century and the break-down of political institutions and social traditions in our own time.’
   

Hannah Arendt, The Origins of Totalitarianism, 1975
   
   

‘You cannot eat coal’
   

‘No, we do not want the coalmine. What will we eat?’ said an elderly woman. I was watching raw, uncut video footage from Phulbari, shot by media activists Zaeed Aziz and Farzana Boby, a couple of days after the killings occurred on August 26, 2006.
   

Another woman steps into the frame. She vents bitterly, we work daily for our subsistence, we eat from what we earn. That is all we have. If this land is turned into a coalmine, those who eat in exchange of daily wages, where will they go? Where will we live? How will we survive?
   

Zaeed and Farzana’s film, ‘The Blood-Soaked Banner of Phulbari’, was released soon after the killings in 2006. I watch the beginning sequence. A crowd of men stand at the long-distance bus stand in Phulbari town, they talk to each other and to the film crew. ‘We are poor people,’ says a man, probably in his late-thirties. ‘If I lose my home, how will I earn a living? What use will be the coalmine?’ Who will it benefit?
   

I return to clips from their uncut footage. A younger woman is sitting in her courtyard, ‘No, I don’t have a husband, I live with my mother, I work with her. In the same place. If the coalmine comes, we, that is, us mothers-and-daughters, where will we go? We will be scattered from our relatives, we will lose our ties.’
   

‘Where will we go?’ This question is repeatedly raised by villagers, by both men and women, old and young, by farmers, day-labourers, petty businessmen, schoolchildren, college-going youths, both Bengalis and adivasis, who belong to Santal, Oraon, Pahan, Mahali and Munda communities. By Hindus and Muslims.
   

‘Two coalmines have been built in neighbouring areas,’ one of the men standing at the bus-stand in the Blood-Soaked Banner documentary had said. ‘What development has it brought, tell me?’
   

I turn to Ronald Halder and Philip Gain’s film, ‘Phulbari’, an activist film released by SEHD earlier this year. Abdul Jalil of village Chouhati turns his face away in pent-up anger when asked how he has benefited from the coalmine in Barapukuria. ‘Benefit? How have I benefited? It has crippled me. I cannot describe the damage it has done. Those who have benefited from it have. We have been devastated.’
   

Azizunessa of the same village does not mince her words. She too has suffered from the Barapukuria coalmine. ‘We are poor people, we raise a cow, a goat or two. But the security guards, they do not let us enter, they do not allow us to cut even a blade of grass. So how does the coalmine that they have built, help us? How do I get my bowl of rice? They do not give me work in the coalmines. My sons have no food. How will they live? Only Allah knows what our situation is like. How our days pass. Or don’t. I did agricultural work, I winnowed paddy, I worked, I ate, I brought in one and a half seers of rice from the house I worked in, I fed the children. Work is not something that appears out of nowhere, that daughters-in-law can bring, that poor people can give each other. Why is it that the coalmine has stopped me from working, from feeding myself? The coalmine is protected by barbed wire fences, it is surrounded by high walls. Why?’ Who benefits from the coalmine?
   

The Phulbari coal project plans to extract coal using open-pit mining method in seven unions and one municipality in four upazilas of Phulbari, Birampur, Nawabganj and Parbatipur in Dinajpur district. The company behind the $1.4-billion project is Asia Energy Corporation (Bangladesh), a wholly-owned subsidiary of the British-registered Global Coal Management Resources Pls. According to Asia Energy, 40,000 people would be involuntarily resettled, 10,000 hectares, primarily of fertile agricultural land, would be required for mine and associated infrastructure. Activists say the number of people evicted is likely to be ten times more. The proposed coal project would divert a river, suck an aquifer dry for thirty years, the life span of the project. Dynamite explosion, environmentalists say, would cause noise and dust pollution, this would be increased by the trucks and trains that will haul away the coal to the port in Sundarban. To prevent flooding, huge pumps will pump out 800 million litres of water daily, from the mine. This will lower the groundwater in an area covering 500 square kilometres. Air and water pollution is likely to spread to surrounding water bodies. Asia Energy plans to create a huge lake after the project is over, but activists predict that the water is likely to be toxic.
   

GCM has a sustainable development manager who guides their approach. But the global record of mining operations rejects the sustainable development myth. Roger Moody, international researcher and campaigner against exploitation caused by multinational mining, writes in ‘Rocks and Hard Places: The Globalization of Mining’, lesser-developed countries, those with a high degree of dependence on mining, show slower rates of economic growth than their peers. Some countries, he writes, have been worse off. Potosi, a region that has been mined for silver for five centuries, is one of the poorest in Bolivia. Closer home is Orissa, Bihar and Jharkand which provide most of India’s minerals. Bihar has been for many years India’s ‘least developed’ state, while Orissa, in 2005, was ranked as the ‘poorest’ in the country. Mined regions even in advanced and middle-income countries have been the last to share in aggregated wealth. In 1870, Cornwall had 2,000 tin and copper mines. When the last pit was closed in 1998, Cornwall had the highest proportion of low-paid workers. Mineral-dependent economies, largely in Africa, are more likely to experience zero or even negative growth, since labour and capital move away from sustainable sectors to the extractive sector, and domestic products lose their competitive edge on international markets.
   

And of course, ‘understanding’ risks, albeit from a safe distance, is not the same as being willing to undergo it oneself. Recently, activists from the Alberta Environmental Network showed up at the Oil and Gas Investment Symposium in Calgary, Canada, held by the Canadian Association of Petroleum Producers. The event brought together 85 companies and 375 investors from Canada, the US, and around the world. Those present at the meeting were offered drinking water that Athabasca Chipewyan First Nation peoples claim is toxic. They experience high rates of rare cancers and auto-immune diseases, which they believe are linked to the development of the tar sands.
   

None of the producers/owners, investors, CEOs drank the water.
   
   

26th August 2006
   

On August 26, 2006, more than 50,000 people took part in protests against the proposed mine, in Phulbari town. People from adjoining towns and villages poured in. The Bangladesh Rifles, a paramilitary force, opened fire on the protesters. Three young men, Tariqul, son of the municipal commissioner and panel chairman, Ameen, a young carpenter, and Salehin of the adjoining upazila Nawabganj died instantly. One to two hundred people are reported to have been injured in the violence unleashed by the BDR and police.
   

I turn to Zaeed and Boby’s uncut video footage. A woman describes angrily, ‘It was around maghreb, just before the call for prayers, the photographers had left, TV reporters too, that’s when they attacked us.’ To leave no photographic evidence? Another woman butts in, ‘We had chased out the police, I was so furious, I have never had the courage before, since that day I have learnt how to fight. Now, I have limitless courage. I am not afraid to die.’ The woman speaking earlier returns to her story, ‘The military [read BDR] began beating up people, they entered into our homes, they tore down the tin roofs.’ She is indignant, ‘These are people who are meant to protect us, they are law-enforcers.’ Another woman speaks up, ‘Did any of them die? They never do. Did any of them suffer any injuries?’
   

A woman who was badly beaten says, ‘The BDR entered our villages, they went from house to house. How dare they enter our villages? So we chased them out. But then they regrouped, they came after us. I couldn’t escape, they caught me and beat me very badly.’ The shot shows other women in the courtyard, nodding their heads as they listen.
   

Off-screen I hear a female voice, ‘Can the government ever defeat the janata?’ A woman wearing a printed sari on-screen says, ‘It is the government which breeds terrorists, they tear down the shops of poor people, they snatch away cigarettes and other items, they break these little cigarette stalls that are run by young boys for a living.’ Another off-screen voice, also a woman’s, speaks up, ‘Ordinary people are never terrorists.’
   

Most of the women, in no uncertain words, condemned Khaleda Zia, the then prime minister, for having sold out the interests of the country. What kind of a woman is she? Sending soldiers after us, dragging our husbands out of our homes. Does she want to make us widows? Their language was laced with four-letter words, often directed at her, at times at the then energy ministry adviser, Mahmudur Rahman, sometimes at the whole cabinet. I brought up the issue with Nurul Kabir, the editor of this paper. He said with a wry smile, ‘I am most respectful of subaltern languages, but wouldn’t it offend bhodrolok sensibilities?’ We laugh and talk about the gentrification of language, a class-ed mechanism of ruling. Who was it who had said there can be feelings without language, but no language without feelings? Was it not the historian Collingwood? I muse over issues of language, of home and belonging as I search the web and read through newspaper reports of the 26th, and after. I come across news reports stating the energy ministry adviser, Mahmudur Rahman, blamed a ‘small group of leftist parties without any influence whatsoever’ for orchestrating the deaths and injury to people at Phulbari. Asia Energy Bangladesh’s CEO Gary Lye’s words mirror Mahmudur Rahman’s, ‘It’s up to the government, but it would appear to us that the unforgivable events and the needless loss of life and suffering that took place in Phulbari are entirely the fault of the organisers.’
   

Those who campaign against the ruthless exploitative practices of trans-national mining companies say, increased investment results in human rights abuses, especially against rural communities which the companies want to dislocate and uproot. They also say that the role of the state in extractive sector governance and citizens’ protection diminishes, while its role in protecting and promoting the interests of trans-national corporations increases. One sees that happening in Phulbari, over Asia Energy’s proposed Phulbari coal project.
   

Mozammel member, a pourasabha member, says in defence of the project, ‘If the government wishes it, how can we prevent it from happening?’ People around him ask, ‘But why do you want the coalmine? Can you not see that it is not in the interests of the people?’ His answer is cruel and simple, ‘We are not for the people. We are for the government.’
   
   

The compensation story
   

In the Blood-Soaked Banner, a man who describes himself as a petty businessman says, ‘Yes, the coal project will bring benefits to some, to those who have built three-storey buildings in the town, those who have made plans of where to relocate, where to build new homes, the businesses that they will start, even, what kind of houses they will build for themselves.’ It will benefit those already-privileged, those who are townspeople. But not those who live off the land, those who make a living from agriculture, from day-labour, and the innumerable number of ways through which poor people make a living. In other words, the majority.
   

Abdul Jalil of Chouhati, Barapukuria was asked about the compensation that he had received from the government. ‘They gave it in little, little instalments, it took ages, the money dried up as I walked back and forth to collect it.’ Compensation is also tied up with land deeds and titles, a method of possession and ownership that is antagonistic to the adivasi tradition, and their claims to ancestral land. That is probably why Lawrence Tudu of Buski, Birampur says, ‘We will not leave this village, we will not leave our homestead, we will not leave the soil, if necessary, my remains will get buried under this soil.’
   

Poor people’s claims to compensation are entangled in bureaucracy, and in corporate controlled channels of profiteering. Corporations themselves evade responsibility and accountability as one sees in Magurcchara and Tengratila, where international oil companies have shown great reluctance to pay compensation for the miserable accidents that have occurred.
   

And compensation for killings? Ameen’s mother when asked said yes, I have received two lakh taka from the government, as compensation. And another twenty thousand from Sheikh Hasina, leader of the Awami League, the then opposition party (interestingly enough, it was the Awami League government that awarded the licensing agreement to Asia Energy, in 1998). But, she says, I hurt, I grieve for my son. I raised him, does compensation lessen my loss? Will money ever call out ‘ma’, or ‘baba’?
   
   

Democracy, a world of power
   

Democracy, writes historian and subaltern theorist Partha Chatterjee in his recent work, ‘The Politics of the Governed’, is no longer government of the people, by the people, and for the people. Twentieth-century techniques of governing population groups, widespread acceptance of the idea of popular sovereignty, the creation of governmental bodies that administer populations but do not provide its citizens with arenas of democratic deliberation, these conditions, says Chatterjee, give rise to democracy becoming a world of power. A world which has startling dimensions, and unwritten rules of engagement.
   

I see the people of Phulbari voice a collective identity, framed, at first, within the politics of electoral democracy. We have brought this government to power. How can they not do what we want? It is my vote that decides who will be the member of parliament. I elect the chairman. He must work for me, in my interests. A woman adds, what kind of a government is it that pushes us into waging movements? That destroys our peaceful lives, that takes away our sons? We want to return to our normal lives. Increasingly, people’s voices become more assertive. If the government does not value us, we will not value them either. If the government will not provide for us, we do not need this government. We do not need any government.
   

Amidst the strident assertiveness, a peasant’s words ring out clearly, ‘I am a khetmojur, I till the land. It is the crops I grow that feed the leaders. Am I more valuable, or they?’
   

Whether elected or un-elected, all governments, both leaders and state functionaries, need to be fed. They would be well-advised to listen to the voices of those who produce. After all, one cannot eat coal. Or money, either.

SUSAN GEORGE: on Global Justice

July 2008

Internationally celebrated scholar/activist SUSAN GEORGE calls for a convergence of the global justice, environmental and peace movements to exert democratic control of an international politics now dominated by a corporate elite.

WALDEN BELLO on Global Justice

July 2008

WALDEN BELLO, author, scholar, activist and founder of Focus on the Global South, lays out his view of the challenges and opportunities of the planetary movement he has helped to organize.

BLUE COVENANT: Maude Barlow - World Water Crisis

July 2008

Introduced by International Forum on Globalization (IFG) founder JERRY MANDER, Celebrated author and world-class activist MAUDE BARLOW talks about the main points of her new book, BLUE COVENANT: The Global Water Crisis and the Coming Battle for the Right to Water.

Will Doha, like Dracula, Come Back from the Dead?

By Walden Bello* and Mary Lou Malig**

Focus on the Global South

Like the good Count of Transylvania, the so-called Doha Round of trade negotiations of the World Trade Organization collapsed twice–the first time during the Cancun Ministerial Meeting in September 2003, the second during the so-called Group of Four meeting in Potsdam in June 2007–only to come back from the dead.  But has the silver stake that will render Doha truly and really dead finally been driven through its heart by the unraveling of the most recent “mini-ministerial” gathering in Geneva?

Stampeded into the WTO

When the Uruguay Round that established the World Trade Organization (WTO) was negotiated from 1986 to 1994, the developing countries were largely bystanders.  Governments that had been members of the General Agreement on Tariffs and Trade (GATT) were dragooned into its successor organization by the threat that if they did not come in on the ground floor, they would be subjected to a painful accession process should they decide to join it later.  In the meantime, they were told, they would, like North Korea, become isolated from global trade.  Preferring the devil they knew to the devil they didn’t, most members of the GATT signed on a document that subordinated all dimensions of a nation’s economic life to the goal of expanding international trade.

Most had not had the time to really absorb the fine print of the 500 plus pages, something that was evident in the case of Indonesia.  When the Indonesian government declared in 1997 that it would build up its car industry by applying the so-called “local content” policy, or mandating the sourcing of a growing portion of a car’s parts to local industries, the US, EU, and Japan—the home countries of the big car corporations—informed it that this would be a violation of the Trade-Related Investment Measures Agreement (TRIMs) of the Uruguay Round and that they would haul Indonesia to a WTO dispute-settlement court. Smaller countries than Indonesia, with minuscule trade bureaucracies, were even more disadvantaged. 

From Seattle to Doha

In any event, by the time the Third Ministerial of the WTO rolled around in late November 1999, developing countries had come to a collective realization that they had bargained away significant space for development in signing on to the Uruguay Round and thus were in no mood to agree to launching another round to liberalize global trade, as the big trading powers demanded.  At the same time, farmers, environmentalists, workers, anti-HIV-AIDS activists, and other sectors of civil society globally were up in arms against the doctrine of “tradeuber alles”–as Ralph Nader described it–that was enshrined in the WTO.  It was this synergy between the massive protests in the streets and the rebellion of developing countries at the Sheraton Convention Center that resulted in the spectacular collapse of the Third Ministerial Meeting in Seattle.

But the EU and US were undeterred.  The Fourth Ministerial Meeting in Doha, Qatar, in November 2001 saw developing countries subjected to tremendous pressure to agree to the launching of a new round in order to “save” the global economy following the September 11 events.  But there was more than moral pressure in the name of the anti-terrorist struggle that was involved.   As Aileen Kwa and Fatoumata Jawara documented in their now classic Behind the Scenes at the WTO, not too subtle threats of retaliation for recalcitrance were combined with offers of massive aid packages.  Most countries were excluded from decision-making, which was effectively confined to a select group of about 30-35 governments handpicked by the EU and US.  The result was the “Doha Development Round,” which had little to do with development and everything to do with expanding developed country access to developing country markets.

The bitter experience of being subjected to divide and conquer tactics in Doha proved to be a turning point for the developing country politics in the WTO.  Alliances were formed—among them, the Group of 20 led by Brazil, India, South Africa and China, to demand cuts in developed country agricultural subsidies and greater access to developed country markets, and the Group of 33 led by Indonesia and the Philippines to push for the creation of “special products” that would be exempted from tariff reductions and for “special safeguard mechanisms” like protective tariffs against surges of highly subsidized agricultural imports from the developed countries.

Collapse in Cancun

The lead-up to the 2003 Cancun Ministerial also featured debates among social movements engaged in the WTO process.  Even after Seattle, there were still some NGO’s that entertained the idea that the WTO could serve as a mechanism to bring about development and that the designation “Doha Development Round” provided an opening. Greater market access to developed country markets for developing country products could be achieved if the WTO free trade agenda in agriculture was supported, some development NGO’s contended. Others argued that, on the contrary, Doha had shown that development was far down the list of concerns of the big trading powers and that the central task was to derail the WTO negotiations or to “get the WTO out of agriculture,” as the international peasant organization Via Campesina put it.

The NGO reformers’ case was not helped by the US and EU, which became even more inflexible when it came to cutting their massive agricultural subsidies.  The EU was also impatient to begin substantive WTO discussions on the creation of disciplines on the so-called “New Issues” of investment, government procurement, competition policy, and trade facilitation.  This effort to bring into the WTO ambit what many regarded as non-trade-related issues sparked the creation of the Group of 90 that opposed inclusion of these items in the WTO agenda. It was the walkout by some members of this grouping when some developed countries insisted on discussing the “New Issues” that led to the collapse of the Cancun Ministerial on Sept 14, 2003, though the ground had been prepared by the stalemate in agriculture. 

If lack of organization led to their being outmaneuvered in Doha, effective coalition building enabled the developing countries to outmaneuver the developed countries in Cancun, with technical support from NGO’s and moral support from social movements seeking to shut down the meeting in a protest atmosphere much like Seattle’s.

Realizing that the WTO was no longer a playground the US could control along with the EU, US Trade Representative Robert Zoellick described the debacle in Cancun as one where “the rhetoric of the ‘won’t do’ overwhelmed the concerted efforts of the ‘can do.’ ‘Won’t do’ led to impasse.”  A few days later, he warned, “As the WTO members ponder the future, the US will not wait: we will move towards free trade with can-do countries.”  That was taken to mean that the US would now concentrate its efforts in obtaining bilateral free trade agreements. These words also marked the beginning of a US assault on the G 20 which succeeded in driving Colombia, Peru, El Salvador, Guatemala, and Costa Rica out of the formation a month after the Cancun collapse. The G 20, however, held.

From Cancun to Potsdam

Cancun may have taken the wind out of Doha’s sails, but over 2004 and 2005, negotiations revived, with both the US and EU trying a new tack. The two had brought in Brazil and India, the leaders of the G20, into a formation called FIPS or Five Interested Parties (the US, the EU, Australia, along with Brazil and India) which for a time managed to contain the opposition. Though the EU and the US had their differences, especially on the question of agricultural subsidies, they nevertheless agreed on an approach whose contours were etched out in the so-called July 2004 Framework that the EU and the US forced through, with the acquiescence of G-20 leaders Brazil and India, at a surprise General Council meeting in the dead of summer in Geneva:  minor concessions on agricultural subsidies in return for big concessions from the developing countries in opening up their industrial sectors (or “non-agricultural market access”)  and services.

The Declaration of the Hong Kong Ministerial in December 2005 was based on this inequitable approach but developed countries played the old divide and rule game by giving different sweeteners to different parties.  They promised the G90 that it would get “The Round for Free” and “Aid for Trade.”  The Round for Free referred to the promise that the G90 countries would have duty free, quota free market access to developed countries. Upon closer inspection of the agreement, however, it was revealed that the US, in fact, maintained tariffs on those products that were of greatest interest to the G90 countries. The G20, on the other hand, received a “pledge” from the EU that it would end agricultural subsidies by 2013. But in the area of non-agricultural market access or NAMA, the harsh “Swiss formula” was in place, which was a tariff reduction formula that would drastically bring down developing countries’ tariffs.

The Hong Kong Ministerial ended with a deal in place but with massive dissastisfaction among developing country delegates, with some raising objections that the format of the final plenary made it difficult for opposition to be heard. There were also massive protests in the streets that were only broken up by the police making more than 900 arrests. Still, the Hong Kong Ministerial could have ended up like Cancun had the Venezuelan government not gone back on its promise to NGO’s that it would vote against the declaration, which would have rendered the it null and void owing to the WTO’s consensus rule.

The Hong Kong Declaration, however, masked continuing, indeed widening, divisions that were very difficult to bridge. In fact, in July 2006, a few months after the deal in Hong Kong, talks broke off in Geneva and were suspended for the rest of the year. In an effort to break the deadlock, the US and EU tried to work out a deal with Brazil and India, the acknowledged leaders of the Group of 20, in talks at Potsdam in June 2007.  The US position was, however, a non-starter: not only did it not want to make substantive cuts in its domestic subsidies but it sought to discredit the agreement on the designation of Special Products and the implementation of a Special Safeguard Mechanism forged in Hong Kong. Both the US and EU were also not willing to depart from their position that the industrializing countries of the South had to make proportionally greater cuts in their industrial tariffs than the industrialized countries in return for US and EU “concessions” in agricultural subsidies. 

Geneva: the Final, Final Collapse?

The collapse of the so-called “G 4” talks in Potsdam placed the Doha Round on life support.  Faced with the prospect that any further postponement of a conclusion to the Round would make the organization he headed irrelevant, Director General Pascal Lamy took a gamble and roused the fatally weakened organization to another late summer tryst in Geneva, this time to a “mini-ministerial,” despite the fact that nothing had happened in the interim to bring the positions of the developed and developing countries any closer. 

Indeed, President Nicolas Sarkozy of France and other EU leaders told EU Trade Commissioner Peter Mandelson to stop talking about further bringing down the EU’s substantial subsidies.  As the talks got underway, US Trade Representative Susan Schwab also made it clear that the US would not agree to reduce subsidies below $15 billion. More decisive in determining the outcome was Washington’s opposition to a very reasonable G 33 formula tabled by India for imposing protective tariffs against agricultural import surges under the Special Safeguard Mechanism agreed to at the 2005 Hong Kong Ministerial. Completely underestimating developing country concerns that food imports had undermined food self sufficiency at a time of rising food prices owing to global food shortages, the US brought on another WTO disaster with its single-minded focus on dumping its subsidized surpluses on foreign agricultural markets.

Not helpful in bringing about a deal was Lamy’s maneuver of limiting the decisionmaking to seven countries, which drew sharp criticism from many among the already circumscribed number of  35 countries that had been invited to the mini-ministerial, including from host country Switzerland.  If ever there was a global meeting that was dead on arrival, this was it.

Lamy gambled and lost, and the WTO is now in a worse position than before, with the prospect that it will evolve like the old League of Nations in the 1930’s:  present but powerless—that is, dead for all intents and purposes. 

In retrospect, the US and EU, used to getting their own way in global trade negotiations, went a bridge too far in the Doha talks.  Instead of being open to real compromise, their intransigence and drive to expand their control of global markets brought about the organizing for self defense of the developing countries at the WTO.  Greed backfired, instigating instead a change in the equation of global economic power.

Nevertheless, just as Dracula could get resurrected in a B-movie sequel, there is no 100 per cent guarantee that the Doha Round and the WTO will not rise again.

*Walden Bello is senior analyst at Focus on the Global South and head of the Freedom from Debt Coalition.  He is also a professor of sociology at the University of the Philippines.  **Mary Lou Malig is coordinator of Focus’ Trade Program.

Derail Doha, Save the Climate

By Walden Bello*, July 29, 2008 by Foreign Policy in Focus

There’s something surreal about the ongoing World Trade Organization talks in Geneva, which aim at coming up with a new agreement to bring down tariffs in order to expand world trade and resuscitate global growth. In the face of the looming specter of climate change, these negotiations amount to arguing over the arrangement of deck chairs while the Titanic is sinking.

Indeed, one of the most important steps in the struggle to come up with a viable strategy to deal with climate change would be the derailment of the so-called “Doha Round.”

Global trade is carried out with transportation that is heavily dependent on fossil fuels. It’s estimated that about 60% of the world’s use of oil goes to transportation activities which are more than 95% dependent on fossil fuels. An OECD study estimated that the global transport sector accounts for 20-25% of carbon emissions, with some 66% of this figure accounted for by emissions in the industrialized countries.

Global Trade: Deeply Dysfunctional

From the point of view of environmental sustainability, global trade has become deeply dysfunctional. Take agricultural trade. As the International Forum on Globalization has pointed out, the average plate of food eaten in Western industrial food-importing nations is likely to have traveled 1,500 miles from its source. Long-distance travel contributes to the absurd situation wherein “three times more food is used to produce food in the industrial agricultural model than is derived in consuming it.”

The WTO has been a central factor in increasing carbon emissions from transport. A study by the OECD done in the mid-nineties estimated that by 2004, the year marking the full implementation of free-trade commitments under the WTO’s Uruguay Round, there would have been an increase in the transport of internationally traded goods by 70% over 1992 levels. This figure, notes the New Economics Foundation, “would make a mockery” of the Kyoto Protocol’s mandatory emissions reduction targets for the industrialized countries.

Transportation: More Fossil Intensive than Ever

Ocean shipping accounts for nearly 80% of the world’s international trade in goods. The fuel commonly used by ships is a mixture of diesel and low-quality oil known as “Bunker C,” which has high levels of carbon and sulfur. As Jerry Mander and Simon Retallack point out, “If not consumed by ships, it would otherwise be considered a waste product.”

Aviation, which has the highest growth rate as a mode of transport, is also the fastest growing source of greenhouse gas emissions, with its consumption of fuel expected to rise by 65% from 1990 levels by 2010, according to one study cited by the New Economics Foundation. Other estimates are more pessimistic, with the Intergovernmental Panel on Climate Change (IPCC) suggesting that fuel consumption by civil aviation is going up at the rate of three percent a year and could rise by nearly 350% from 1992 levels by 2050. Note Mander and Retallack: “Each ton of freight moved by plane uses forty nine times as much energy per kilometer as when it’s moved by ship….A two-minute takeoff by a 747 is equal to 2.4 million lawn mowers running for twenty minutes.” In support of trade expansion and global economic growth, authorities have by and large not taxed aviation fuel as well as marine bunker fuel, which now account for 20% of all emissions in the transport sector.

Along with fossil-fuel-intensive air transport, fossil-fuel-intensive road transport has also been favored by the expansion of world trade, instead of modes with less emission intensities like rail and marine traffic. In the European Union, for instance, the focus on building up a road transport network led an OECD study to comment that “the way in which the EU liberalization policy has been implemented has favored the less environment-friendly modes and accelerated the decline of rail and inland waterways.”

Decoupling Growth and Energy: a Panacea

There has been talk about decoupling trade and growth from energy or shifting from fossil fuels to other, less carbon-intensive energy sources. The reality is that the other energy sources being seriously considered are either dangerous, like nuclear power; with deleterious side-effects, like biofuels’ negative impact on food production; or science fiction as this stage, like carbon sequestration and storage technology. For the foreseeable future, trade expansion and global growth will fall in line with their historical trajectory of being correlated with increased greenhouse gas emissions.

A sharp U-turn in consumption and growth in the developed countries and a significant decrease in global trade are unavoidable if we are to have a viable strategy against climate change. This will set the stage for a reduction in greenhouse gas emissions, including from the energy-intensive transportation sector. The outcome of the Doha negotiations will determine whether free trade will intensify or lose momentum. A successful conclusion to Doha will bring us closer to uncontrollable climate change. It will continue what the New Economics Foundation describes as “free trade’s free ride on the global climate.”

A derailment of Doha won’t be a sufficient condition to formulate a strategy to contain climate change. But given the likely negative ecological consequences of a successful deal, it’s a necessary condition.

Foreign Policy In Focus columnist Walden Bello is senior analyst at the Bangkok-based research and advocacy institute Focus on the Global South and professor at the University of the Philippines.